The Juneau Assembly passed a $195 million budget Monday night, despite a $500,000 hole created by Gov. Murkowski's line-item veto pen Monday morning and unfilled requests from the school district and nonprofit organizations.
"We've been a very reasonable community, and we're going to go back in and figure it out and balance our books," said Assembly member Jim Powell, who chairs the Finance Committee. "It's just too much and too late to calculate this before June 15."
The Assembly met its June 15 budget deadline this year, but a number of unresolved issues remain. Those issues include the governor's cuts, $305,000 in additional funding requested by the Juneau School District and $400,000 in additional requests from nonprofits and other groups. Assembly members have pledged to discuss the issues at a July 9 meeting.
"What we pass today will be an interim budget of sorts," Powell said.
The veto is bad news for city budget makers, who have already described Juneau's budgetary future as grim. They cite rising costs for city employees' health care and the public employee retirement system.
Originally, the budget came in with a $2 million gap due to an anticipated 25-percent cut in municipal revenue-sharing money from the state, a decrease in business property values and declines in sales-tax revenue. The city was able to make up for the losses with one-time cuts in department spending and some new fees, such as increased bus fares.
Murkowski administration Chief of Staff Jim Clark said Monday morning that Gov. Frank Murkowski will use his line-item veto to cut state funding to municipalities. About $1.06 million of that will come out of Juneau's annual budget. The governor has proposed using one-time federal funding from President Bush's Jobs and Growth Tax Relief Act to partially absorb the loss, making the overall cut about $500,000.
"We were cut a million. We will probably receive about a half a million. So you are looking at a half a million debt," said City Manager Rod Swope.
Assembly members have already begun looking at ways to generate about $535,000 to fill the city's gap. First, the city had budgeted for a slight drop in the operational mill rate for property taxes, but the Finance Committee recommended holding the mill rate at 10.44 mills. By leaving the mill rate unchanged, the city can recoup about $185,000 in revenue. There also were fewer appeals to property tax assessments this year, which allowed for an additional $150,000. Some committee members also proposed an increase to the hazardous waste fee for junk cars, which would result in $200,000 in revenue.
Even if the Assembly finds $535,000 to fill the gap, it will be left with the problem of fully funding Juneau schools. When the city budget was generated, the Assembly was required to fund the school district at 4 mills, or $10.7 million. Officials elected to add funding on top of that to a state-mandated cap for a total school district budget of about $18 million.
Since the budget was created, numerous education cuts at the state level have put the Juneau School District more than $1 million in deficit. At the same time, the Legislature also increased the amount of money municipalities can contribute to schools under the cap. The additional amount totals $305,900, which is not yet in the city budget.
At Monday's meeting, Assembly member Stan Ridgeway tried to add the $305,900 to the budget, but his amendment failed. Many members said they needed additional time to look at the budget as a whole.
"We need to consider it with all the other cuts," Powell said. "We will roll up our sleeves on July 9, and I think there's a lot of support to fund education."
Reporter Timothy Inklebarger contributed to this story.